By Providence Obuh
A recent study has shown that increased use of electronic payment products, including credit, debit and prepaid cards, added $296 billion to GDP, while raising household consumption of goods and services by an average of 0.18 percent per year.
The study “The Impact of Electronic Payments on Economic Growth”is a 2016 study conducted by Moody’s Analytics that analyzed the impact of electronic payments on economic growth across 70 countries between 2011 and 2015.
In addition, Moody’s economists estimate that the equivalents to 2.6 million new jobs were created on average per year over the five years period as a result of increased use of electronic payments. The 70 countries in the study make up almost 95 percent of global GDP.
Chief Economist of Moody’s Analytic, Mr. Mark Zandi, said, “Electronic payments are a major contributor to consumption, increased production, economic growth and employment creation. Those countries which saw large increases in card usage also saw larger contributions to overall growth in their economies.”
The study indicated that the electronification of payments benefited governments and contributed to a more stable and open business environment.
Additionally, the report found that electronic payments helped to minimize what is commonly referred to as the grey economy — economic activity that is often cash-based and goes unreported. As a result, electronic payments provided a higher potential tax revenue base for governments, while also bringing the added benefits of lower cash handling costs, guaranteed payment to merchants and greater financial inclusion for consumers.
Also speaking, Chief Executive Officer, Visa Inc. Mr. Charlie Scharf, added; “These findings reinforce the many positive benefits that electronic payments brings to local economies all over the world. This research also suggests that the right public policies can create an open, competitive payment environment and contribute to economic growth and job creation. At Visa we are partnering globally with governments, financial institutions, merchants and technology companies to develop innovative payment products and services that will accelerate electronic acceptance, grow commerce, and bring the benefits of card payments to more people everywhere.”